Horizontal inter‐firm cooperation in Ethiopian small and medium enterprises

Abstract

Purpose The purpose of this paper is to explore the nature of cooperative relationships among competing firms by highlighting the purpose for, and the degree of cooperation in, different areas of joint activities. It also aims to examine factors fostering or hindering cooperation between competing firms. Design/methodology/approach The data used in this study were collected from September 2007 to February 2008 from 100 small and medium‐sized leather shoe manufacturing firms operating in Addis Ababa, Ethiopia. Findings The study result shows that most firms operate not in isolation, but in collaboration with other firms at the same stage of a value chain. They use cooperation with other firms primarily for accessing financial and tangible resources that are essential for plugging gaps in internal capabilities. While geographical proximity of firms facilitated by kinship and regional background of families foster cooperative relationship; negative perception to competition and lack of trust to partner firms are factors that hinder effective cooperative relationship among competing firms. Practical implications The study has important implications for governments and enterprise support organizations that seek to enhance competitiveness of small to medium‐sized enterprises (SMEs) through horizontal inter‐firm cooperation in Ethiopia, and elsewhere in sub‐Saharan Africa. Originality/value There are very few Ethiopian studies that have focused on horizontal inter‐firm cooperation. This paper, therefore, contributes to the body of knowledge by looking deep into the purpose for, and degree of cooperation, as well as factors fostering or constraining the emergence and sustainable continuation of alternative forms of cooperative relationship among competing SMEs in Ethiopia.

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